Why governments are desperate about regulating the crypto market
In the ever-evolving global economy, the financial industry plays a crucial role. It is driving the economy and providing businesses, individuals, and organizations along with the governmental institutions with the financial resources necessary to operate. The sector as a whole has gone through a lot recently with the number of major tech innovations revolutionizing the way we use financial services. Yet, undoubtedly the biggest breakthrough of this millennium was the introduction of the world’s first decentralized Blockchain-based cryptocurrency Bitcoin in 2009 which changed the industry as we knew it before.
Just over a decade ago, no one could have imagined that a digital currency would be a thing. Even after Bitcoin was launched back in 2009, the vast majority of people who had heard of it were either confused or made fun out of the concept. Yet, we can not blame them as something this radical and new was not easy to understand. After the launch, Bitcoin soon was forgotten as the price remained low and everyone refused to use it. The real attention came in after 2016 as the Bitcoin’s price tag hit the landmark milestone, surpassing the $1000 bar. After this achievement, the cryptocurrency, along with the entire sector started skyrocketing. Soon after the latter milestone, Bitcoin managed to hit $10,000, followed by the $20,000 mark.
Today, Bitcoin is not worth as much as it used to back in 2017, during the boom of the crypto industry. However, it has now found a stable environment with a more predictable and trustworthy price tag. More importantly, Bitcoin is no longer the only significant player in the crypto sector. So-called altcoins, or in other words the successors of Bitcoin, are becoming more and more popular. Some experts even expect that the altcoin market will soon overtake Bitcoin which will eventually lose its dominance over this rapidly soaring industry.
Use of cryptocurrencies in the 21st-century economy
Naturally, there would be no point having the entire sector o cryptocurrencies if they had no profitable, relevant and beneficial use. Gladly, cryptocurrencies offer a whole variety of benefits ranging from convenience to speed and transparency. Many major companies, small businesses, and organizations are now using cryptocurrencies to make their day to day operations easier. These entities are quite influential and big names.
For instance, Wikipedia, a global encyclopedia on the web with millions of user-generated articles uses cryptocurrencies for donations. This brilliant platform is trying to put cryptocurrencies to good use. They ask users who prefer paying in Bitcoin and are active users to donate in cryptocurrency.
The entire online gambling sector has now transformed into a crypto-friendly industry. More and more new online casinos allow payments in cryptocurrencies, importantly even in smaller ones, unlike in the case of big companies like Microsoft. This approach has gained so much popularity that some casinos even have online casino bonus offers in cryptocurrencies.
Microsoft is another major company that allows payments in Bitcoins. The technological megacorporation that unites a number of globally used products and services accepts Bitcoin payments since 2014. The latter was one of the first significant names to make such a brave move.
Why do nations strive towards crypto-friendly legal environments?
There are many other bright examples of cryptocurrency adoption globally. However, there is a problem, and the dropping of Bitcoin payments by the travel planning and organization platform Expedia made it quite apparent. The latter started accepting Bitcoin payments back in 2014, along with Microsoft. Being one of the largest travel planning platforms in the world, this was seen as an extremely innovative step. For 4 years, the company managed to keep accepting Bitcoins. However, in 2018, it officially confirmed that this would no longer be the case.
So what caused the decision if the crypto market is commercially profitable and beneficial? The answer is quite complex but the main reason hides deep in the legal and governmental structures we are used to. As of now, the vast majority of governments around the world do not recognize cryptocurrencies as a legal means of financial operations. This poses as a stumbling block for commercial companies, individuals, and organizations that want to allow crypto payments. Therefore, for the majority of businesses that make a step forward to allowing crypto payments, they later prove to be unsustainable.
Another important part of the problem is that there is a big lack of knowledge and information about the crypto sector and how it works. It is understandable since the language used by crypto enthusiasts along with the principles and technological means used in the process is not as easy to comprehend. That is why there is an urgent need for a certain body, whether it is a government or an organization to raise awareness and organize an informational campaign. Only this way can the sector become appealing to the general public around the world.
So what is the role of national governments in this process and why are they being proactive to legalize and regulate the crypto market? First off, just like with any financial operation, the crypto market should also be taxed if legal. In major countries with big economic ecosystems and financial systems, this could mean tens of millions or even more in incomes for the state. This is why many governments all around the world try to regulate the crypto sector and make it an organic part of the economy.
Moreover, more and more businesses, both like Microsoft and smaller ones use cryptocurrencies for financial operations. Such companies are of utmost importance for economies and their success. That is why governments try to come up with a legal framework that would allow uninterrupted operation of such businesses within countries in efforts to foster economic activity.
Last but not least, many governments, even some of the most conservatives ones, are using cryptocurrencies for their own benefit. Russia, for example, has launched its own cryptocurrency and is actively lobbying for its widespread use. On the other hand, neighboring Estonia, which has been dubbed to be the most technologically advanced post-soviet nation is running a fully blockchain-based e-governance system, e-citizenship along with other services, including social security. There are many reasons why governments are striving to regulate crypto sectors and this number will only keep growing.